Tax Day is just a week from now, and hopefully you followed Matt’s advice and have already mailed in your forms to the government. If you haven’t, well, get to it!
Now is the perfect time to get your filing cabinet ready for your next round of returns. Since you should actually KEEP your tax returns and associated financial documentation, you want to have a systematized method for organizing these papers. Why keep them? First of all, if you ever get audited, you’ll really want them. Secondly, in case of your death, these documents may be needed in the settling of your estate. Whatever the situation, you’ll need these in paper form and not digital scans.
Any returns older than 10 years can be grouped by decade. I’ve been paying income taxes for about 20 years, so I have a 1980s file and a 1990s file. Then, I have 10 working files for the most recent 10-year period. These are labeled “Tax Year 0” through “Tax Year 9.” Papers for the year 1999 are still in the Tax Year 9 folder, and they will remain there until 2009’s returns are ready for the file. This year’s taxes were filed in the Tax Year 8 folder, and the 1998 files were moved to the 1990s decade file.
In theory, you could get by with only decade folders. However, I have found that often when my tax documents are requested that they’re for specific years. In these cases, it has been extremely convenient to just reach in and grab the exact file. These requests tend to happen the most often with documents from the last 10-year period.
Here’s hoping that you get a nicely organized filing cabinet and a big return from the government this year!